A chat room is a venue where multiple users, usually sharing a common interest, can communicate with each other through the internet or other computer networks. Examples of chat rooms include, but are not limited to online chats, instant messaging and online forums. Communication in a chat room is not limited to just text but can include other sources of communication (e.g. file share, webcams, audio).
In the context used by financial professionals, there are specific types of chat rooms, including unilateral chat rooms, bilateral chat rooms, and multilateral chat rooms). Unilateral chat rooms concern communication between users within one organization, bilateral chat rooms concern communication between users in only two organizations and multilateral chat rooms concern communication between users of multiple organizations.
Recent regulatory investigations have highlighted the unauthorized use of multilateral chats by market participants, where traders from more than two organizations joined restricted member chat rooms with the sole purpose to collude and manipulate market rates for their own commercial gain. These multilateral chats are contrary to bilateral chats which are widely accepted as forums for members from two organizations to meet and to conduct legitimate business. However, detecting whether a conversation is on a bilateral or multilateral firm basis can be extremely difficult to detect given the number of aliases used across different messaging systems that can mask the actual identity and organizational association of room participants. For example, if a user registers for an account on a consumer network, their username and login ID may take the form e.g.: username@consumerdomain.co* and there exists no automatic method to authenticate the user or their association to an organizational entity. If multiple users with similar credentials are all present in a chat room, it becomes increasingly difficult to detect how many firms have members present in the room.
Furthermore, the regulatory reforms, unprecedented fines, reputational damage and, for some, criminal charges that have occurred as a result of scandals has forced many institutions to review their structures, their cultures and in particular their use of chat rooms on instant messaging systems. For many, this has resulted in the creation of central administration teams with designated responsibility for managing all chat rooms joined or created on behalf of their users with the sole aim of ensuring enforcement of bilateral communications Typically this requires a workflow to ensure all new room requests and associated business approvals are routed to the central team for action. It also requires an administrator interface for the central teams to configure and manage their rooms, which only adds to the complexity.
Accordingly, improved systems and techniques are needed to enforce bilateral communications without the onerous and expensive administrative overhead and to allow financial professionals to communicate with their counterparties whilst also adhering to compliance standards.